Commercial developers see bright future for county, region
Leaders in Western Pennsylvania’s commercial real estate industry spent about 90 minutes Thursday discussing the development future of Southpointe and Washington County, giving both a strong “thumbs up.”
The event, held at Southpointe’s Hilton Garden Inn, drew more than 100 real estate professionals. It was produced by BisNow, North America’s largest commercial real estate news and events company.
Moderated by panelist Dusty Elias Kirk, an attorney and global real estate practice leader for Pittsburgh-based Reed Smith, the discussion examined a variety of topics ranging from the need for light-rail transit to where the next Southpointe-type development would occur in the county.
Kirk posed the questions to Lucas Piatt, president of Millcraft Investments, the developer of the original 600 acres of Southpointe and lead developer in downtown Pittsburgh; and Jim Scalo, president of Burns & Scalo Real Estate Services, which along with Millcraft developed numerous office buildings in Southpointe and continues with projects today in Southpointe II.
Rounding out the panel were R.T. Walker, vice president of CBRE Pittsburgh’s energy facilities group, which has placed numerous energy companies in the region; and Gary M. Holloway Jr., president of Philadelphia-based GMH Capital Partners, which recently closed on the Cork Factory Lofts in Pittsburgh and is building 1400 Main, a 370-unit upscale apartment building for Southpointe II lead developer Horizon Properties.
Kirk, who recently attended a leadership conference in Denver with county officials from Western Pennsylvania, noted that the major difference between the Colorado city and Pittsburgh is its highly developed mass transit system.
Piatt and other panelists agreed that mass transit needs to be a part of the region’s transportation layout in the future, but acknowledged it would be costly and would require a public-private partnership to accomplish.
Scalo noted plans to connect Oakland to Pittsburgh and Pittsburgh International Airport, but said the system should be regional in scope.
“It needs to get bigger,” he said.
They noted that it could complement the $550 million, 13-mile extension of the Southern Beltway that will connect Route 22 in Robinson and Interstate 79 near Southpointe.
“We need to focus on mass transit and light rail,” Piatt said.
Looking again at future development in Washington County, Kirk asked developers to speculate on where the next Southpointe-type project might occur.
Piatt said it could be Cool Valley, a 911-acre swath of land secured over more than a decade by Ohio developer Ron Sabatino and his T&R Properties Group. But Piatt added that the proposed development, across Interstate 79 from Southpointe, has been slow to materialize.
The Redevelopment Authority of Washington County, which is working with Sabatino, said in early March it forged a new agreement with the developer and had commissioned a traffic study to determine the development of traffic infrastructure.
Scalo noted that the last available parcel of land in the 300-acre Southpointe II development is about to be sold.
Walker said the Starpointe development near Burgettstown, situated between the Utica and Marcellus shale fields, is another prime candidate for commercial growth.
When Kirk asked panelists their views on future retail development, they said it will be necessary to serve a growing population.
Holloway said residents in 1400 Main will be well served by restaurants and smaller retail businesses in the new adjacent Town Center development, but said more big-box stores outside of the development would probably be needed.
Piatt said he believes additional retail development will occur in the Racetrack Road corridor, adding that more big-box development also is coming to the Old Mill project along Route 19.
He said in addition to Racetrack Road, Newbury Market in South Fayette Township will become a major retail center for the area.
Piatt said he hopes to see more commercial development for downtown Washington, where a decade ago Millcraft proposed its “Crossroads” project of retail and apartments, but was unable to bring it to fruition.
“Downtown Washington has struggled for many years” as a result of growth outside of its boundaries, Piatt said.
“We love downtown Washington; it is a county seat. The Crossroads project didn’t work out,” he added.
Panelists agreed that the oil and gas industry has driven much of the commercial development in the region over the past several years, with companies like Range Resources and Noble Energy making major commitments for space in Southpointe II.
But Scalo added that Southpointe has benefited as well from nonenergy industry growth, noting the new office buildings for Mylan and Ansys.
Walker said Shell’s proposed ethane cracker plant in Beaver County would create more industrial growth for the region in plastics and chemicals.
While Shell has been doing its due diligence work at the proposed work site, “they’re playing it close to the vest,” Walker said.
One of the few dark clouds mentioned by developers is the issue of real estate taxation, more specifically the subject of property reassessment, which they say hinders commercial and residential development.
While Washington County is in the midst of property reassessment, the developers said a comprehensive statewide system that would require reassessment every three years would help to smooth out the discrepancies found in the current system.
“It’s not a Pittsburgh issue; it’s a statewide issue,” Scalo said.